Intercompany Transactions Concepts

In preparing consolidated financial statements, we need to eliminate transactions between companies or entities included in the group for consolidation and only report results arising out of transactions with third parties. This is achieved through intercompany elimination.In general, whenever there is intercompany transactions entered for an entity and its ICP member, the intercompany transactions get eliminated at first common parent.

Below slides show a basic example of intercompany transactions between child entities and how the transactions get eliminated at the first common parent.